Realtors® are Experts in the Local Market

By Rebecca Wissink

One job of a Realtor® is to provide real-time and local advice to their clients, but this advice must be based on the market conditions at that moment, for that type of home, in that neighbourhood, of that city. While this may seem like common-sense, this can come as a shock to someone who has faithfully followed the media stories about the national housing market and expects the same results in their local market. There is no national real estate market, which should have been made very clear by the different trajectories the Calgary real estate market took over the last two years when compared to the housing markets of Atlantic Canada, cottage country in Ontario, or the Fraser Valley of BC. Each market is unique, with its own specific influencers, and only a local Realtor® who is an expert in the current market conditions can advise you on these matters. Table 1 below offers a quick comparison chart to illuminate the difference between the “national” market and Calgary’s.  

Table 1. Year-over-year Changes (March 2021 – March 2022) in the National and Calgary Housing Markets (Sources: CREA and CREB) 

Further, Figure 1 below from the Calgary Real Estate Board (CREB) shows the vast differences in sales numbers and prices increases between the various types of housing in Calgary, which illuminates the second reason a Realtor’s® advice must also be based on current market conditions. Even homes in the same city, if of a different type, or in a different area of the city, will be subject to different valuations and supply/demand influences. So while an article may report that “single-family detached homes are up more than $100,000 over the past 12 months, including almost $50,000 in the first quarter of 2022, according to … Royal LePage” this does not mean that your home rose by $50,000 or that by summer of 2022 houses will have increased by another $50,000. 

Figure 1. March 2022 Statistics from the Calgary Real Estate Board 

As for Calgary in April 2022, a couple of factors are likely at play influencing the local housing market. Prices have risen so much that some buyers are priced out or will have to look to the surrounding areas outside the city. Case in point, in Calgary in March 2022, over 57% of the available supply is priced over $600,000. While the city set new sales records again in March, the unadjusted benchmark price only increased by four percent, while in neighbouring Airdrie the price rose nearly ten percent. Buyers who have lost out multiple times in bidding situations may be frustrated, and others may have had their pre-approvals expire. Because of rising interest rates, buyers in the market have less purchasing power than they did even four months ago. It is likely that the buyers left seeking housing are more careful than their peers who bought in the frenzied marketplace. These buyers are looking for the right house at the right price in a market that still has incredibly low inventory. All of which is reducing the pressure in the marketplace.  

Yet, other factors continue to pressure Calgary’s housing market. I have previously written that Alberta has very low housing prices compared to other major cities in the country, which is attracting interest to the area, that Alberta is finally enjoying a resurgence in folks moving to the province, and that investors are paying attention to Alberta. An article on Bloomberg in mid-April 2022 refers to anecdotal stories of Calgary Realtors® getting inquiries from, or selling to, folks from Ontario. The article also uses evidence from Statistics Canada which shows that in the final months of 2021, Alberta welcomed more interprovincial migrants than any other province for the first time in six years. The majority of these folks come from Ontario, possibly in search of “what they believe is their last opportunity to own an affordable piece of real estate in a large Canadian city.” The Bloomberg article surmises that the perfect storm of the COVID-19 related escalation of housing prices in much of Canada “has coincided with Alberta's recovery from years of recession due to depressed oil prices.” Essentially, folks are “cashing out of a (high-priced) market, leaving segments of Ontario, and coming here [Alberta] for ... more affordable real estate." But here’s something else about this buyer that needs to be considered; some of them are now cash buyers who don’t have to worry about rising interest rates because they won’t be taking out a mortgage. Which should translate to continued pressure on Calgary’s real estate market. 

So, while the national real estate market is reacting to the increased interest rates and prices that skyrocketed by almost fifty percent over the last two years in some locations, we need to step away from national headlines and averages and look at Calgary specifically, right now. Figure 1 above from CREB shows the statistics for the month of March, and the year-over-year change, but it hides what happens on a weekly basis. In contrast, Table 2 below suggests the peak for sales of detached homes in the city has likely passed, occurring the week of March 1-7, 2022.  

Table 2. Number of Sales of Detached Homes in Calgary (Source: Ross Pavl) 

The peak of the market frenzy may have passed both nationally and locally. The Royal Bank of Canada’s Assistant Chief Economist, Robert Hogue, has stated as much for the national market, while the Senior Economist at the Bank of Montreal, Robert Kavcic, suggests this is likely the start of a downward national trend, although it is too early to know for sure. However, this does not mean that Calgary will follow the same trend. In fact, the president of RE/MAX Canada, Christopher Alexander, “told the Financial Post … there are still hot pockets in the GTA and Calgary areas.” This comes despite Calgary and Toronto leading the decline in sales volumes to contribute to a drop of more than five percent nationally.  

There is still some speculation that some local markets could experience a “mild” price correction, given the “outsized gains” that occurred over the last year. However, Robert Hogue believes that “solid fundamentals and scare inventories” suggest there is a low probability of a complete market crash. This is despite Oxford Economics calling for a 24 - 40% correction/crash in the Canadian housing market over the next two years. Robert Kavcic believes it will take until summer to truly assess what trend any housing market is going to take, “after another 100 (basis points) of (Bank of Canada) tightening and when mortgage pre-approvals are expired.” Locally, a Royal LePage broker in Calgary, Corinne Lyall, said “she expects the hot market to continue until about the third quarter, when supply and increased interest rates finally form a new equilibrium.”  

If you have any questions regarding the Calgary and area real estate market, please reach out to an experienced Ross Pavl ELITE Real Estate Group Realtor® today for an up-to-date housing market assessment.  

Image via creative commons, courtesy of bambe1964